Going Public

There are a number of reasons for going public; however, the main reason is for a company to have easier access to capital.

At Castle Rock Resources, we work as members of a client’s team, offering knowledge and expertise in assisting you in becoming a public company.

We recognize the power of a public company that is not available to a private company. If you are considering going public contact us to learn more.

Public Company Advantages

  • Access to Capital: A publicly traded company has greater financing alternatives than a private company. A publicly traded company can return to the public markets for additional capital via a bond or convertible bond issue or secondary equity offering. A public status can also provide favorable terms for alternative financing from public and private investors. Additionally, public, lenders and suppliers may perceive the company as a safer credit risk, thereby increasing the opportunities for favorable financing terms. Also, a publicly traded company’s stock can be utilized to be used as collateral to secure loans.
  • Valuation: In general, public companies have a higher valuation than private enterprises. This fact has been proven by many studies to be up to a multiple of five times. In a recent article in Entrepreneur magazine in 2001 cited the following as potential reasons for such higher valuation: market liquidity, profit measurement, capitalization/capital structure, risk profile, and differences in operations. This is very important in a scenario whereby your company may eventually be acquired by another company.
  • Control: There are few things more loathsome than having a VC replace your management team, or worse, pull funding just as you were about to prove your business model. You can avoid the pitfalls of a single, all-powerful funding source by going public as an entry into market rather than as an exit strategy for your VC. You’ll appreciate having a say in how your company grows, and your VC will enjoy having not shouldered the entire risk load along the way.
  • Liquidity: A publicly traded company has created a market for its stock in which buyers and sellers participate. As such, stock in a public company is much more liquid than private company stock. Being publicly traded may provide a ready outlet for investors, institutions, founders, owners and venture capital funds.
  • Compensation: It is increasingly common to recruit and compensate executives and employees with a combination of salary and stock. Stock based compensation can be instrumental in attracting and keeping key personnel. An allocation of ownership or division of equity can lead to increased productivity, morale and loyalty. This type of compensation is a way of connecting an employee’s financial future to the company’s success.Such stock compensation to employees is more desirable if the stock has a public market. Also, certain tax advantages are a consideration when issuing stock to an employee. Generally, capital gains taxes are lower than ordinary income taxes.Stock in a public company can be issued as a performance based reward or incentive. As such, the public company may be able to lower its operating overhead by compensating employees with cash and a stock option plan.
  • Prestige: Being publicly traded can help a company to gain prestige by creating a perception of stability. A company’s founders, co-founders and managers gain an enormous amount of personal prestige from being associated with a client that goes public. Prestige can be very helpful in recruiting key employees and marketing products and services. This exposure may lead to improved recognition and business operations. Often a company’s suppliers and consumers become shareholders, which may encourage continued or increased business. In this example, a public company could have a large competitive advantage over its private competitors.
  • Image: A publicly traded company tends to have a higher profile than private firms. This may be important in industries where success requires customers and suppliers to make long-term commitments. Indeed, the suppliers’ and customers’ perception of company success is often a self-fulfilling prophecy.
  • Publicity: A publicly traded company may generate prestige, publicity and visibility, which is effective when marketing your company and its products or services. Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise. A successful public listing can get a company’s story out to the world which may open an opportunity for investors that are not suited for an investment in a private company. Additionally, being publicly traded makes it easier for other companies to notice and evaluate the firm for potential synergies or potential acquisition.
  • Mergers & Acquisitions: Once a company is public and the market for its stock is established, the company’s stock can be looked at as “currency”. It is sometimes looked at more favorably than cash due to long-term tax implications when acquiring a business. This fact, along with the higher valuation of a public company, can make a key acquisition less expensive than for its private counterparts.
  • Exit Strategy: One of the important benefits of being a publicly traded company is the fact that when the company’s stock eventually becomes liquid, it may provide an effective exit strategy and financial freedom for its founders and employees. A public market for the stock may also provide a potential exit strategy and liquidity to the investors. Owning a publicly traded stock may enhance the personal net worth of a company’s shareholders.

Castle Rock Resources is dedicated to taking both domestic and foreign companies public through alternatives to the standard initial public offering (IPO) process. With expertise in reverse mergers, direct filings, and foreign exchange listings, we are able to provide our clients with a comprehensive going public support strategy from start to finish.

Contact us TODAY (Click HERE) to discuss how Castle Rock Resources can assist your company in Going Public.

Our Mission

To provide emerging growth companies the exposure they need to achieve success in the Financial Markets and to help our clients and investors realize their true potential through mutual growth.

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